CHORDIA BUILDCON PVT LTD, JAIPUR V. DCIT, CIRCL-6, JAIPUR

ITA 64/JPR/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2086 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 10-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Additional depreciation; Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure; TDS
• Section: 143(3); 142(1); 40(a)(ia); 143(2); 48; 13; 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH````````````````````````````````````````````````` ``````````````````````````````````````````````````` ``````````````````````````````````````````````````` ``````````````````````````````````````````````````` ``````````````````````````````````````````````` FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 64/JP/2020 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 CHORDIA BUILDCON PVT. LTD. 29, JANPATH SHYAM NAGAR, JAIPUR CUKE VS. THE DCIT, CIRCLE- 6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCC6853D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VINOD KUMAR GUPTA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. RUNI PAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 18/03/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 15/04/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 30.12.2019 FOR THE ASSESSME NT YEAR 2011-12 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EALS:- 1.THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE IN THE ORDER U/S 143(3)/147 OF THE ACT, DATED 16.02.2018 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHE R STATUTORY REASONS AND HENCE, KINDLY BE DELETED. 2. THE LD.CIT(A) ERRED IN CONFIRMING THE VERY ACTIO N TAKEN BY THE AO U/S 147 R.W.S 148 OF THE ACT, WHICH IS BAD IN LAW, WITHOUT JURISDICTION, MERELY BASED ON CHANGE OF OPINION AND BEING VOID AB -INITIO, THE SAME KINDLY BE QUASHED. CONSEQUENTLY, THE IMPUGNED ASSES SMENT FRAMED U/S 143/147 OF THE ACT DATED 16.02.2018 KINDLY ALSO BE QUASHED. 3. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN HOLDING THAT COM PENSATION OF ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 2 RS.52,27,012/- IS LIABLE TO BE CAPITALIZED. THE ADD ITION SO MADE AND CONFIRMED BY THE LD. CIT(A), IS CONTRARY TO THE PRO VISIONS OF LAW AND FACTS, MERELY BASED UPON SUSPICION HENCE, KINDLY BE DELETED. 4. THE LD.CIT(A) ERRED IN LAW AS WELL AS ON THE FAC TS OF THE CASE IN CONFIRMING ACTION OF THE AO IN MAKING ADDITION OF R S. 50,820/- ON ACCOUNT OF NON DEDUCTION OF TDS ON INTEREST TREATIN G THE PAYMENT MADE AS INTEREST INSTEAD OF COMPENSATION AS CLAIMED BY T HE ASSESSEE. THE ADDITION SO MADE AND CONFIRMED BY THE LD.CIT(A), IS CONTRARY TO THE PROVISIONS OF LAW AND FACTS, MERELY BASED UPON SUSP ICION, AND NOT APPRECIATING THE SUBMISSIONS OF THE ASSESSEE, HENCE KINDLY BE DELETED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND FILED ITS RETURN OF INC OME ON 28.09.2011 DECLARING LOSS OF RS. 27,04,932/- AND THE ASSESSMENT WAS COMP LETED U/S 143(3) ON 14.03.2014 AT NIL INCOME. SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED ON 28.3.2018 AFTER RECORDING THE REASONS AND SEEKING A PPROPRIATE APPROVALS. IN RESPONSE, THE ASSESSEE FILED ITS RETURN OF INCOME D ECLARING NIL INCOME, SUBSEQUENTLY, NOTICE U/S 148 WAS SUPPLIED TO THE AS SESSEE AND OBJECTIONS SO RECEIVED FROM THE ASSESSEE WERE DISPOSED OFF VIDE O RDER DATED 13.12.2018. THEREAFTER, NOTICE U/S 143(2) AND 142(1) WERE ISSUE D AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE REASSESSMENT W AS COMPLETED AT AN ASSESSED INCOME OF RS 52,77,832/- DISALLOWING COMPE NSATION PAID TO PLOT OWNERS AMOUNTING TO RS 52,72,012/- AND ANOTHER DISA LLOWANCE OF RS 50,820/- WAS MADE UNDER SECTION 40(A)(IA) OF THE ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS UPHELD THE RE-OPENING OF ASSESSMENT U/S 148 AS WELL AS SUSTAINED THE DISALLO WANCES MADE BY THE ASSESSING OFFICER. AGAINST THE SAID FINDINGS, THE A SSESSEE IS IN APPEAL BEFORE US. 3. IN GROUND NO. 1 & 2, THE ASSESSEE HAS EFFECTIVEL Y CHALLENGED THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER U/S 147 OF THE ACT. ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 3 4. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THE ASSESSEE IS A REAL ESTATE DEVELOPER WHO HAS FLOATED A TOWNSHIP PR OJECT COMPRISING OF RESIDENTIAL AS WELL AS COMMERCIAL SHOPS AND STARTED GETTING THE BOOKINGS. AT THE TIME OF BOOKING, ACCORDING TO THE APPROVED MAP, THERE WAS A 60 FEET ROAD PASSING UNDER HT LINE. SUBSEQUENTLY, THE ELECT RICITY BOARD CHANGE THE POLICY OF HAVING 180 FEET ROAD UNDER HT LINE, CONSE QUENTLY, JDA REVISED THE MAP AND THE SOME PLOTS UNDER CONSIDERATION GOT MERG ED IN THE ROAD, HENCE, BECOME NOT SALEABLE. THE ASSESSEE HAD ALREADY RECEI VED THE BOOKING FOR THESE PLOTS BUT THIS SUBSEQUENT EVENT MADE THESE PL OTS NOT SALEABLE, HENCE THE ASSESSEE COMPANY HAD TO COMPENSATE THEM WHICH W AS DEBITED IN P&L ACCOUNT UNDER THE HEAD COMPENSATION PAID DUE TO HT LINE AND COMPENSATION PAID DUE TO BOOKING CANCELLATION. TH US, THE NATURE OF EXPENDITURE WAS CLEARLY DISCLOSED IN THE FINANCIAL STATEMENT ITSELF. THE CASE WAS ORIGINALLY SELECTED FOR SCRUTINY AND A DETAILED QUESTIONNARIE WAS ISSUED ALONGWITH NOTICE U/S 142(1) DATED 19.08.2013. THE A O ASKED SPECIFIC QUERIES WITH REGARD TO SUBJECT COMPENSATION DEBITED IN P&L ACCOUNT VIDE POINT NOS. 27 AND 28 OF THE QUESTIONNAIRE. AFTER CONSIDERING T HE REPLY OF THE ASSESSEE, NO DISALLOWANCE OF COMPENSATION WAS MADE AND REVENU E EXPENDITURE WAS ALLOWED BY THE AO IN THE ORIGINAL ASSESSMENT PROCEE DINGS COMPLETED U/S 143(3) VIDE ORDER DATED 14.03.2014. THEREAFTER, AF TER LAPSE OF FOUR YEARS, NOTICE U/S 148 WAS ISSUED ON 28.3.2018. IT IS RELEV ANT TO NOTE THAT CASE WAS REOPENED BASED UPON THE ASSESSMENT RECORDS AND SUBM ISSION FILED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE S AME IS EVIDENT FROM THE REASONS RECORDED, WHICH IS REPRODUCED IN PARA 2 OF THE REASSESSMENT ORDER PASSED U/S 147 OF THE ACT. 5. IT WAS FURTHER SUBMITTED THAT IN RESPECT OF COMP ENSATION OF RS.50,820/- AGAINST BOOKING CANCELLATION, SIMILAR REASONS WERE RECORDED BASED UPON QUERIES AND REPLY SUBMITTED DURING ORIGINAL ASSESSM ENT PROCEEDINGS ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 4 COMPLETED U/S 143(3) OF THE ACT. IT WAS SUBMITTED THAT THIS ISSUE WAS ALSO DISCUSSED IN DETAIL AT THE TIME OF ORIGINAL ASSESSM ENT PROCEEDINGS. THE AO HAD ASKED SPECIFIC QUERY IN THIS RESPECT VIDE NOTIC E U/S 142(1) DATED 19.08.2013 AT POINT NO.28. THE QUERY WAS DULY REPLI ED BY THE ASSESSEE ALONG WITH NAME OF THE PERSON TO WHOM PAYMENT HAS BEEN MA DE, AMOUNT OF PAYMENT, DATE OF PAYMENT ETC. THESE DETAILS HAVE AL SO BEEN REPRODUCED BY THE AO IN THE REASONS RECORDED AND THEREFORE, THIS BEING ALSO A CASE OF CHANGE OF OPINION. 6. IT WAS FURTHER SUBMITTED THAT THE AO WHILE MAKIN G THE REASSESSMENT U/S 147 HAD INFACT, TAKEN NOTE IN PARA 5.4 OF HIS O RDER, THE SUBMISSION MADE ON THE ISSUE UNDER CONSIDERATION DURING THE ORIGINA L ASSESSMENT PROCEEDINGS U/S 143(3) AND THE SAME READS AS UNDER: 'IN ADDITION TO THE ABOVE, IN ONE OF ITS REPLIES MA DE DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSEE HAS STATED THAT THE COMPENSATION HAS BEEN GIVEN TO SAVE THE GOODWILL OF THE COMPANY, THUS CLEARLY THE POSITION TAKEN IN REGARD TO SUCH E XPENDITURE BY THE ASSESSEE HIMSELF IS IN NATURE OF CAPITAL EXPENDITUR E. THE SAID EXPENSE IS, ALTERNATIVELY, TO BE TREATED AS AN EXPENSE TO E NHANCE THE GOODWILL OF THE COMPANY. SUCH EXPENSE HAS THE NATURE OF A CAPIT AL EXPENSE. OF THE ORDER UNDER CONSIDERATION. THE COMPENSATION PAID TO THE BUYER WERE CLAIMED IN THE PROFIT & LOSS ACCOUNT. ' 7. IT WAS FURTHER SUBMITTED THAT AS THE REOPENING O F THE ASSESSMENT HAS BEEN DONE AFTER 4 YEARS FROM THE END OF THE ASSESSM ENT YEAR AND AS EVIDENT FROM THE REASONS RECORDED BY THE AO, HE HAS NO WHER E ALLEGED THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULLY ALL MATERIAL FACTS. 8. IT WAS ACCORDINGLY SUBMITTED BY THE LD AR THAT P AYMENT UNDER CONSIDERATION IS COMPENSATION PAID TO PLOT BUYERS W HICH WAS CLEARLY DISCLOSED IN THE FINANCIAL STATEMENTS. DURING THE ORIGINAL AS SESSMENT PROCEEDINGS, ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 5 QUERIES WERE RAISED AND ISSUE WAS EXAMINED BY THE A SSESSING OFFICER. THE PRESENT REASSESSMENT PROCEEDINGS HAVE BEEN INITIATE D BASED SOLELY UPON THE ASSESSMENT RECORDS WHEREIN SUBMISSIONS OF THE ASSES SEE FILED DUIRNG THE ORIGINAL ASSESSMENT PROCEEDINGS HAVE BEEN TAKEN AS THE BASIS AND THERE IS NO FRESH MATERIAL WHICH HAS BEEN BROUGHT ON RECORD. AD MITTEDLY, SUBMISSION MADE AND ISSUE DISCUSSED DURING THE ORIGINAL ASSESS MENT PROCEEDING HAVE ALSO BEEN REVIEWED AND REAPPRECIATED BY THE AO WHIL E PASSING THE REASSESSMENT ORDER U/S 148. IT IS A CASE WHERE ASSE SSMENT HAS BEEN RE- OPENED AFTER FOUR YEARS AND IT IS ALSO ADMITTED FAC T THAT FULL AND TRUE DISCLOSURE WAS MADE BY THE ASSESSEE DURING THE ORIG INAL ASSESMSENT PROCEEDINGS AND THERE IS NO FAILURE ON PART OF THE ASSESSEE. THE AO WHILE RE- OPENING MERELY REVIEWED THE ORDER PASSED BY HIS PRE DECESSOR AND IT IS CLEARLY A CASE OF CHANGE OF OPINION BASED ON REVIEW OF EXIS TING FACTS AND SUBMISSIONS FILED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. D URING THE COURSE OF FIRST APPELLATE PROCEEDINGS ALSO, THE CONTENTION REGARDIN G CHANGE OF OPINION WAS RAISED BEFORE LD.CIT(A) BUT NO SPECIFIC FINDINGS WA S RECORDED ON THIS ISSUE AND ACTION OF AO FOR INITIATION OF REASSESSMENT PRO CEEDINGS WAS SUSTAINED SUMMARILY. IT WAS ACCORIDNGLY SUBMITTED THAT IT IS A CASE OF MERE CASE OF CHANGE OF OPINION AND WHICH IS NOT PERMISSABLE AS P ER SETTLED LEGAL PROPSITION AND THEREFORE, CANNOT HOLD ON THE LEGAL SCRUTINY OF THE REQUIREMENT FOR INITIATION OF PROCEEDINGS U/S 148 AND ACCORDINGLY, THE NOTICE ISSUED U/S 148 AND CONSEQUENT REASSESSMENT PROCEEDINGS U/S 147 SHO ULD BE QUASHED AND SET-ASIDE. 9. IN SUPPORT OF HIS CONTENTIONS, THE LD AR HAS PLA CED RELIANCE ON THE DECISIONS IN THE CASE OF KRISH HOMES PVT. LTD. VS I TO (ITA NO. 237/JP/2019 DATED 23.12.2019) , ACIT VS MANGLAM CEMENT LIMITED (2017) 78 TAXMANN.COM 334 (JAIPUR TRIB) AFFIRMED BY THE HONB LE RAJASTHAN HIGH COURT (IN DBITA NO.211/2017 DATED 04.09.2017 , CIT VS VAISHALI AVENUE (2014) 48 TAXMANN.COM 289 (RAJ), CIT VS HINDUSTAN ZINC LIMITE D (2016) 70 ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 6 TAXMANN.COM 262 (RAJ) AND CIT VS KELVINATOR OF INDI A LTD (2010) 187 TAXMAN 312. 10. PER CONTRA, THE LD DR SUBMITTED THAT THE AO RE OPENED THE ASSESSMENT PROCEEDINGS AFTER RECORDING THE DUE REASONS AND DUE SATISFACTION AFTER FOLLOWING DUE PROCESS. THE CASE OF THE ASSESSEE WAS REOPENED IN THE LIGHT OF INFORMATION/DOCUMENTS TO THE EXTENT WHICH WERE AVAI LABLE WITH THE AO. THE MATERIAL BEFORE THE ASSESSING OFFICER WAS RELEVANT AND AFFORDS A LIVE LINK OR NEXUS TO THE FORMATION OF THE PRIMA FACIE BELIEF TH AT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE . THE SUFFICIENCY AND CORRECTNESS OF MATERIAL NEED NOT BE LOOKED AT THE I NITIAL STAGE AT THE TIME OF REOPENING OF THE CASE. WHILE CONSIDERING WHETHER CO MMENCEMENT OF REASSESSMENT PROCEEDINGS WAS VALID, THE COURTS HAVE HELD THAT WHAT HAS TO SEEN IS WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIEN CY OR CORRECTNESS OF THE MATERIAL IS NOT TO BE CONSIDERED AT THAT STAGE. THE REASONS TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFIC ER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSME NT, HE CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED A SSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSIN G OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR C ONCLUSION AND WHAT IS REQUIRED IS REASONS TO BELIEVE BUT NOT THE ESTABL ISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY Q UESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ASSUMPTION OF JURISDICTION BY THE AO U/S 147 IN THE PRESENT CASE AND THERE IS NO MERIT IN THE CONTENTION SO ADVANCED BY THE LD AR . IN SUPPORT OF HER CONTENTIONS, THE LD DR RELIED ON THE DECISION IN CA SE OF RAYMOND WOOLLEN MILLS VS ITO [1999] 236 ITR 34(SC) AND ACIT VS RAJESH JHA VERI STOCK BROKERS (P) LTD [2007] 291 ITR 500 (SC). ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 7 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE AND IT IS A SETTLED LEGAL PROPOSITION THAT FOR ASSUMPTION OF JURISDICTION U/S 147, THE ASSESSING O FFICER MUST FORM A PRIMA FACIE OPINION ON THE BASIS OF MATERIAL THAT THERE I S AN ESCAPEMENT OF INCOME, THE OPINION FORMED MAY BE SUBJECTIVE BUT THE REASON S RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW THAT THE OPINION IS NOT A MERE SUSPICION, THE REASONS RECORDED AND/OR THE DOCUMENT S AVAILABLE ON RECORD MUST SHOW A NEXUS AND RELEVANCY TO THE OPINION FORM ED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOME AND THE REAS ONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER . IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH THE R EASONS RECORDED BY HIM AND HE HAS TO SPEAK THROUGH THE REASONS. IN THE PRE SENT CASE, THE REASONS RECORDED BY THE ASSESSING OFFICER BEFORE ISSUANCE O F NOTICE U/S 148 READ AS UNDER:- ON GOING THROUGH THE ASSESSMENT RECORDS, IT WAS N OTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.52,27,012/- IN HIS P&L ACCOUNT AS COMPENSTION PAID TO PLOT OWNERS DUE TO HIGH TENT ION LINE OVER SUCH PLOTS. THE ASSESSEE HAS GOT BACK THE PLOTS FOR WHIC H COMPENSATION WAS PAID BY THE ASSESSEE. THESE PLOTS HAVE NOW BECOME T HE PART OF HIS CLOSING STOCK. THE ASSESSEE HAS ITSELF ADMITTED THA T THE PRICES OF LAND HAVE GONE UP AND HE HAD TO COMPENSATE THE PLOT HOLD ERS FOR THE ENHANCED VALUE. THIS INCREASE IN VALUE OF LAND WOUL D GO ON TO INCREASE THE COST OF THE CLOSING STOCK. IN VIEW OF THIS MATT ER, INSTEAD OF DEBITING THE EXPENDITURE AS REVENUE, THE EXPENDITURE OUGHT T O HAVE BEEN CAPITALIZED WHICH WOULD HAVE GONE TO INCREASE THE C LOSING STOCK. BY THE RELEVANT AMOUNT. IN ONE OF ITS REPLY, THE ASSESSEE HAS STATED THAT THE COMPENSATION HAS BEEN GIVEN TO SAVE THE GOODWILL OF THE COMPANY, THUS CLEARLY THE POSITION TAKEN IN REGARD TO SUCH E XPENDITURE BY THE ASSESSEE HIMSELF IS IN NATURE OF CAPITAL EXPENDITUR E. FURTHER IN THE CASE ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 8 OF ASST. COMMISSIONER VS SEVEN ARTS FILMS (2014) 33 ITR TRIB. 694 (CHENNAI), IT HAS BEEN HELD THAT THE COMPENSATION P AID TO SAVE THE GOODWILL OF HE COMPANY WAS CAPITAL IN NATURE. ALSO IT IS PRETINENT TO MENTION HERE THAT THE COMPENSATION PAID TO SUCH PLO T OWNERS IS TO BE MADE PART OF THE COST OF PLOTS ITSELF AND NOT TO TR EAT THE SAME AS REVENUE EXPENDITURE. THUS IN VIEW OF ABOVE THERE SH ALL BE MADE ADDITION OF RS.52,27,012/- IN THE INCOME OF THE ASS ESSEE FOR THE YEAR UNDER CONSIDERATION. 12. ON PERUSAL OF THE REASONS SO RECORDED BY THE AS SESSING OFFICER, IT IS NOTED THAT THE MATERIAL AND INFORMATION ON THE BASI S OF WHICH HE HAS FORMED THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT I S THE ASSESSMENT RECORDS, WHEREIN ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, IT WAS NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.52,27,012/- AS COMPENSTION PAID TO PLOT OWNERS DUE TO HIGH TENTION LINE OVER SUCH PLOT S AND SUBMISSIONS FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS STAT ING THAT THE PRICES OF LAND HAVE GONE UP AND HE HAD TO COMPENSATE THE PLOT HOLDERS FOR THE ENHANCED VALUE AND IN ANOTHER SUBMISSION WHERE THE ASSESSEE HAS STATED THAT THE COMPENSATION HAS BEEN GIVEN TO SAVE THE GO ODWILL OF THE COMPANY. THE FACT THAT THE ASSESSEE HAS GOT BACK THE PLOTS F OR WHICH COMPENSATION WAS PAID BY THE ASSESSEE AND THESE PLOTS HAVE NOW BECOM E THE PART OF HIS CLOSING STOCK ARE ALSO EMERGING FROM THE EXISTING ASSESSMEN T RECORDS WHEREIN THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) DATED 14.0 3.2014. THE TREATMENT OF SUCH AN EXPENDITURE, WHICH HAS BEEN CLAIMED AS R EVENUE BY THE ASSESSEE, AS CAPITAL EXPENDITURE IS THEREFORE A POINT OF VIEW AND AN OPINION BASIS THE EXISTING FACTS AND MATERIAL AVAILABLE ON RECORD AND NOT ON THE BASIS OF ANY FURTHER FACTS WHICH HAVE COME ON RECORD OR ANY FRES H ENQUIRY CONDUCTED BY THE ASSESSING OFFICER AS ALSO APPARENT FROM THE REA SONS SO RECORDED WHERE THE ASSESSING OFFICER HAS ADMITTED THAT NO ENQUIRIES A RE REQUIRED TO BE MADE AT THE END OF AO AS THE FACTS ARE SUBJECT TO VERIFICAT ION OF BOOKS AND ASSESSMENT ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 9 RECORDS. SIMILAR IS THE POSITION REGARDING COMPENS ATION PAID AGAINST BOOKING CANCELLATION WHERE THE ASSESSING OFFICER REFERS TO THE ASSESSMENT RECORDS AND LEDGER ACCOUNT OF SHRI KRISHAN KUMAR GUPTA AND HELD THAT THE PAYMENT HAS BEEN MADE IN THE NATURE OF INTEREST AMOUNTING TO RS 68,320/- WHICH SHOULD SUFFER TDS AND IN ABSENCE OF THE SAME, THE DISALLOW ANCE SHOULD HAVE BEEN MADE U/S 40(A)(IA) OF THE ACT. THE POSITION WHICH IS THEREFORE EMERGING FROM THE REASONS SO RECORDED BY THE ASSESSING OFFICER IS THAT THERE IS NO NEW MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER AND BASIS THE EXISTING MATERIAL AVAILABLE ON RECORD, HE HAS FORMED THE BEL IEF THAT THE INCOME HAS ESCAPED ASSESSMENT. IN THIS CASE, THE ASSESSMENT W AS ORIGINALLY COMPLETED U/S 143(3) AND AS APPARENT FROM THE QUERIES RAISED BY THE ASSESSING OFFICER AND REPLY SUBMITTED BY THE ASSESSEE COMPANY, MATTER PERTAINING TO COMPENSATION PAID ON ACCOUNT OF HT LINE AND COMPENS ATION PAID AGAINST BOOKING CANCELLATION WERE DULY EXAMINED BY THE ASSE SSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. THEREFORE, THE FA CTS THAT THERE WAS COMPENSATION PAID ON ACCOUNT OF HT LINE AND COMPENS ATION WAS PAID AGAINST BOOKING CANCELLATION AND DEBITED IN THE PROFIT/LOSS ACCOUNT WERE AVAILABLE ON RECORD AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDIN GS AND THE ASSESSING OFFICER WAS DULY CEASED OF SUCH FACTUAL POSITION AN D CLAIM OF THE ASSESSEE COMPANY AND BASIS EXAMINATION THEREOF, THE CLAIM OF THE ASSESSEE COMPANY WAS ALLOWED BY THE ASSESSING OFFICER WHILE COMPLETI NG THE ORIGINAL ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. IT IS THEREFORE CLEARLY A CASE OF CHANGE OF OPINION WHERE ON THE SAME FACTS AND MATER IAL ON RECORD, THE ASSESSING OFFICER WISHES TO TAKE A DIFFERENT VIEW T HAN THE VIEW ALREADY TAKEN BY HIS PREDECESSOR AND SUCH CHANGE OF OPINION CANNO T BE A BASIS FOR REOPENING AS THE AO HAS THE POWER TO REASSESS BUT N O POWER TO REVIEW HIS OR HIS PREDECESSOR ORDER, AS HELD BY THE HONBLE SUPRE ME COURT IN CASE OF KELVINATOR OF INDIA LTD (SUPRA) WHERE AFFIRMING THE FULL BENCH DECISION OF THE HONBLE DELHI HIGH COURT, IT WAS HELD AS UNDER: ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 10 4. ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MAD E TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX L AWS (AMENDMENT) ACT, 1987 , RE- OPENING COULD BE DONE UNDER ABOVE T WO CONDITIONS AND FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED J URISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT [WITH EFFECT FROM 1-4-1989], THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE AS SESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T, CONFERS JURISDICTION TO RE-OPEN THE ASSESSMENT. THEREFORE, POST 1-4-1989 , POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS T O GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BE LIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITR ARY POWERS TO THE ASSESSING OFFICER TO RE-OPEN ASSESSMENTS ON THE BAS IS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON T O REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BE TWEEN POWER TO REVIEW AND POWER TO RE-ASSESS. THE ASSESSING OFFICE R HAS NO POWER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSM ENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEH ALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE-OPENING THE ASS ESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CH ANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1-4-1989 , ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO TH E CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REAS ONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. OUR V IEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOT ED HEREINABOVE. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 , P ARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN SECTION 147 OF THE ACT. HOWEVER, ON RE CEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', PARLIAMENT RE-INTRODUCED THE S AID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WO ULD VEST ARBITRARY POWERS IN THE ASSESSING OFFICER. WE QUOTE HEREINBEL OW THE RELEVANT PORTION OF CIRCULAR NO. 549 , DATED 31-10-1989, WHI CH READS AS FOLLOWS : '7.2 AMENDMENT MADE BY THE AMENDING ACT, 1989, TO R EINTRODUCE THE EXPRESSION 'REASON TO BELIEVE' IN SECTION 147. A N UMBER OF ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 11 REPRESENTATIONS WERE RECEIVED AGAINST THE OMISSION OF THE WORDS 'REASON TO BELIEVE' FROM SECTION 147 AND THEIR SUBS TITUTION BY THE 'OPINION' OF THE ASSESSING OFFICER. IT WAS POINTED OUT THAT THE MEANING OF THE EXPRESSION, 'REASON TO BELIEVE' HAD BEEN EXP LAINED IN A NUMBER OF COURT RULINGS IN THE PAST AND WAS WELL SETTLED A ND ITS OMISSION FROM SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSE SSING OFFICER TO REOPEN PAST ASSESSMENTS ON MERE CHANGE OF OPINION. TO ALLAY THESE FEARS, THE AMENDING ACT, 1989 , HAS AGAIN AMENDED S ECTION 147 TO REINTRODUCE THE EXPRESSION 'HAS REASON TO BELIEVE' IN PLACE OF THE WORDS 'FOR REASONS TO BE RECORDED BY HIM IN WRITING , IS OF THE OPINION'. OTHER PROVISIONS OF THE NEW SECTION 147, HOWEVER, R EMAIN THE SAME.' 13. SIMILARLY, IN CASE OF HINDUSTAN ZINC (SUPRA), T HE HONBLE RAJASTHAN HIGH COURT HAS HELD AS UNDER: 12. IN THE INSTANT CASE, IT IS TO BE NOTICED THAT THE A SSESSEE HAD MADE TRUE AND FULL DISCLOSURE OF ALL RELEVANT FACTS RELA TING TO THE CLAIM OF ADDITIONAL DEPRECIATION AND ALSO IN RESPECT OF CLAI M FOR GRANT OF DEDUCTION UNDER SECTION 80-IA. A SEPARATE AUDIT REP ORT IN THE PRESCRIBED FORM 10CCB IN SUPPORT OF THE CLAIM FOR DEDUCTION UN DER SECTION 80- IA/80-IB WAS ALSO DULY SUBMITTED. THE ASSESSEE HAD ALSO SUBMITTED REPLY PURSUANT TO ALL QUERIES MADE BY ASSESSING OFF ICER DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3). IN THI S VIEW OF THE MATTER, THE CONTENTION SOUGHT TO BE RAISED BY THE R EVENUE ABOUT NON- DISCLOSURE ON THE BASIS OF THE FAILURE ON THE PART OF THE ASSESSEE IN MENTIONING BIFURCATED AMOUNT OF ADDITIONAL DEPRECIA TION ALLOWABLE IN THE DEPRECIATION CHART IS ABSOLUTELY BASELESS. IT I S TO BE NOTICED THAT ALL THAT HAS BEEN SAID BY THE ASSESSING OFFICER IS THAT AFTER SCRUTINY ASSESSMENT, IT WAS OBSERVED THAT ASSESSEE HAS MADE INCORRECT CLAIM OF ADDITIONAL DEPRECIATION ON CAPTIVE POWER PLANT WHER EAS, THE CLAIM FOR ADDITIONAL DEPRECIATION ON CAPTIVE POWER PLANT WAS ALLOWED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT UNDE R SECTION 143(3) AFTER CONSCIOUS CONSIDERATION OF THE MATERIAL ON RE CORD. IT IS NOT EVEN ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 12 THE CASE OF THE REVENUE THAT THE FORMATION OF THE B ELIEF REGARDING THE ESCAPEMENT OF INCOME BY THE ASSESSING OFFICER IS BA SED ON ANY NEW MATERIAL COMING ON RECORD. APPARENTLY, THE FORMATIO N OF THE BELIEF BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF THE A SSESSMENT IS BASED ON RE-APPRECIATION OF THE MATERIAL ALREADY AVAILABL E ON RECORD AT THE TIME OF SCRUTINY ASSESSMENT WHICH AMOUNTS TO MERE C HANGE OF OPINION. OBVIOUSLY, IN THE GARB OF PURPORTED EXERCISE OF THE POWER TO REASSESS, THE ASSESSING OFFICER CANNOT BE PERMITTED TO REVIEW HIS OWN ORDER OR THE ORDER PASSED BY HIS PREDECESSOR. THUS, THE FIND ING ARRIVED AT BY THE TRIBUNAL THAT THE REASSESSMENT PROCEEDINGS INITIATE D BY THE ASSESSING OFFICER BY MERE CHANGE OF OPINION IS PATENTLY ILLEG AL, CANNOT BE FAULTED WITH. 14. IN THE INSTANT CASE ALSO, WE FIND THAT THE REO PENING OF THE COMPLETED ASSESSMENT U/S 143(3) IS WITHOUT BRINGING ANY FRESH MATERIAL ON RECORD AND WHERE THE MATERIAL RELIED UPON HAS ALREADY BEEN EXA MINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, IT CLEARLY AMOUNTS TO CHANGE OF OPINION WHICH AS PER SETTLED JURISPRUDENC E, AS WE HAVE NOTICED SUPRA, CANNOT BE SUSTAINED AND NOTICE SO ISSUED U/S 148 SEEKING TO REOPEN THE ASSESSMENT IS LIABLE TO BE SET-ASIDE. 15. ANOTHER CONTENTION WHICH HAS BEEN RAISED BY THE LD AR IS THAT IN THE REASONS SO RECORDED, THE ASSESSING OFFICER HAS NOT ALLEGED THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULLY ALL MATERIAL FACTS AND WHERE THE POWERS UNDER SECTION 147 OF THE ACT HAVE TO BE EXERCISED BY THE ASSESSING OFFICER AFTER A PERIOD OF FOUR YEARS, THE RE HAS TO BE A FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND INF ORMATION BY THE ASSESSEE WHICH IS NOT ALLEGED BY THE ASSESSING OFFICER IN TH E INSTANT CASE. IN THIS REGARD, WE NOTE THAT THE ORIGINAL ASSESSMENT WAS CO MPLETED U/S 143(3) VIDE ORDER DATED 29.02.2016 FOR THE IMPUGNED ASSESSMENT YEAR 2011-12 WHEREIN THE RETURNED INCOME DECLARING TOTAL INCOME AT NIL W AS ACCEPTED AND ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 13 SUBSEQUENTLY, THE NOTICE U/S 148 WAS ISSUED ON 28.0 3.2018 WHICH IS CLEARLY AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND AS PER PROVISO TO SECTION 147 OF THE ACT, FOR A SSUMPTION OF JURISDICTION IN SUCH CASES, ADDITIONAL REQUIREMENT WHICH HAS TO BE SATISFIED IS THAT THERE HAS TO BE A FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSM ENT YEAR. IN THIS REGARD, THE OBSERVATIONS OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT V. MULTIPLEX TRADING & INDUSTRIAL CO. LTD. 378 ITR 350 ARE RELEV ANT IN THIS RESPECT WHEREIN IT WAS HELD THAT: 24. IN OUR VIEW, THE QUESTION WHETHER THE ASSESSEE COULD HAVE BEEN STATED TO DISCLOSED FULLY AND TRULY ALL MATERIAL FA CTS HAVE TO BE EXAMINED IN THE LIGHT OF FACTS OF EACH CASE AND ALSO THE REA SONS THAT LED THE AO TO BELIEVE THAT INCOME OF AN ASSESSEE HAS ESCAPED ASSE SSMENT. IN A CASE WHERE THE PRIMARY FACTS HAVE BEEN TRULY DISCLOSED A ND THE ISSUE IS ONLY WITH RESPECT TO THE INFERENCE DRAWN, THE AO WOULD N OT HAVE THE JURISDICTION TO REOPEN ASSESSMENT. BUT IN CASES WHE RE THE PRIMARY FACTS AS ASSERTED BY THE ASSESSEE FOR FRAMING OF ASSESSME NT ARE SUBSEQUENTLY DISCOVERED AS FALSE, THE REOPENING OF ASSESSMENT MAY BE JUSTIFIED'. THEREFORE, THE FACT THAT THERE IS FAILURE ON THE PA RT OF THE ASSESSEE TO DISCLOSE PRIMARY FACTS HAVE TO BE SEEN AND SUCH FAILURE SHOU LD BE DISCERNABLE ON READING OF THE REASONS SO RECORDED BY THE ASSESSING OFFICER. IN THE INSTANT CASE, AS WE HAVE NOTED ABOVE, ON THE REASONS SO REC ORDED, THE ASSESSING OFFICER HAS REFERRED TO THE ASSESSEES FINANCIAL ST ATEMENTS, THE PROFIT/LOSS ACCOUNT AND SUBMISSIONS FILED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND BASIS THE SAME, HAS HELD THAT THE I NCOME HAS ESCAPED ASSESSMENT. TO OUR MIND, THESE ARE ALL PRIMARY FAC TS AS TO THE TREATMENT DONE BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS OF TH E COMPENSATION SO PAID BY IT WHICH ARE DULY DISCLOSED AND WHERE ON APPRECIATI ON OF SUCH PRIMARY FACTS, ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 14 THE ASSESSING OFFICER IS OF THE VIEW THAT SUCH EXPE NDITURE IS IN NATURE OF CAPITAL EXPENDITURE AND NOT REVENUE EXPENDITURE, IT IS HIS INFERENCE AND ANALOGY WHICH HAS DRAWN BASIS REVIEW OF SUCH PRIMAR Y FACTS. HOWEVER, AS FAR AS ONUS ON THE ASSESSEE TO DISCLOSE THE PRIMARY FAC TS ARE CONCERNED, THE SAME HAS BEEN SATISFIED AND THERE IS NO SUCH FAILUR E AND INFACT, IN THE REASONS SO RECORDED, THERE IS NO ALLEGATION MADE BY THE ASS ESSING OFFICER THAT THERE IS ANY SUCH FAILURE ON THE PART OF THE ASSESSEE COMPAN Y AND AS WE HAVE STATED ABOVE, IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM AND HE HAS TO SPEAK THROUGH THE REASONS. THEREFORE, WE AGREE WITH THE CONTENTION SO ADVANCED BY THE LD AR THAT THIS BEING A JURISDICTION REQUIREMENT AND IN ABSENCE OF ANY SUCH FAILURE ON PART OF THE ASSESSEE COMPANY, THE ASSESSING OFFICER CANNOT ASSUME JURISDICTION U/S 147 OF THE ACT. 16. IN LIGHT OF AFORESAID DISCUSSIONS AND RESPECTFU LLY FOLLOWING THE DECISIONS REFERRED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT IN THE INSTANT CASE, THE ASSESSING OFFICER DOESNT HAVE THE LEGAL BASIS TO A CQUIRE JURISDICTION FOR REASSESSMENT AND THUS, THE NOTICE ISSUED UNDER SECT ION 148 AND CONSEQUENT REASSESSMENT PROCEEDINGS ARE QUASHED AND SET-ASIDE. 17. THE OTHER GROUNDS RAISED ON MERITS OF THE ADDI TIONS HAVE THEREFORE BECOME ACADEMIC AND WE DO NOT PROPOSE TO ADJUDICATE THEM AND THE SAME ARE DISMISSED AS INFRUCTIOUS. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/04/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 64/JP/2020 CHORDIA BUILDCON PVT. LTD. VS. DCIT 15 FNUKAD@ DATED:- 15/04/2020. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- CHORDIA BUILDCON PVT. LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE, 6, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 64/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR